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Security regulations and best practices for fintech in 2024

Read about cybersecurity regulations shaping the fintech and banking landscape and the best practices to remain compliant and protect customer data.

Balazs PoznerFebruary 19, 2024 · 5 min read · Last Updated:

In their continuous attempt to deliver seamless, user-friendly, but secure financial services, fintech companies and banks need to always stay vigilant against cyberattacks that could compromise customer data and disrupt operations.

In 2024, the security landscape for finance and banking organizations will become even more complex. Companies will face a multitude of new or tightened laws aimed at making financial services more secure. CISOs, infosecurity professionals, and IT security teams need to prepare for the stricter requirements of upcoming financial regulations to remain compliant.

In the first part of this blog post, we detail the most significant changes affecting finance and banking companies this year. In the second part, we explore key cybersecurity practices that help them build and maintain a strong security posture and remain compliant with regulations.

Regulators are emphasizing consumer protection in finance and banking

Governments and financial regulators around the world are increasingly scrutinizing finance companies’ cybersecurity practices to protect consumer data.

Within the EU, the enforcement of the Digital Operational Resilience Act (DORA) will solve an important problem in the financial regulation space, aimed at raising cybersecurity standards for financial entities, and will take effect from January 17, 2025.

DORA is tailored specifically to organizations within the EU-27, including banks, insurance companies, credit agencies, and similar institutions. Companies affected must establish measures to safeguard their systems against malicious manipulation, destruction, or theft of data. Failure to comply with these directives could result in sanctions and penalties.

In the United States, the Consumer Financial Protection Bureau is actively developing a new regulation on personal data rights. This rule aims to empower consumers by granting them control over their personal financial data, also expected to take effect in 2024.

Best practices for finance and banking companies to stay secure and compliant

  1. Establish a proactive approach to security

Ensuring the security of your online assets requires ongoing dedication. Companies, particularly those handling sensitive data like fintechs or banks, should adopt proactive measures to outpace cybercriminals. These measures include conducting regular security audits, Pentest as a Service, and managed Bug Bounty Programs.

  1. Continuously monitor your security posture

Establishing a proactive strategy is the initial phase in safeguarding your company and customer data. However, you can further strengthen it by integrating tools that enable you to oversee security testing activities. This enhances transparency and accountability within your security testing endeavors.

  1. Adopt Zero Trust Architecture

ZTA refers to a security model that assumes no user or device is inherently trusted, requiring continuous verification before granting access to resources. This approach is becoming increasingly important in fintech as companies deal with a growing number of remote workers and partners who may access sensitive data.

  1. Enforce biometrics and multi-factor authentication (MFA)

Biometric authentication, such as fingerprint or facial recognition, is becoming a must in fintech apps and other financial services to enhance security beyond traditional password requirements. MFA adds an extra layer of protection by requiring multiple authentication factors, such as a password and a code from a mobile device.

  1. Leverage AI tools for fraud and threat detection

AI is being increasingly employed in fintech cybersecurity to detect anomalies, predict potential threats, and automate security tasks. For instance, AI-powered fraud or threat detection systems can flag suspicious transactions in real time.

  1. Collaborate and share learnings with other organizations

As cyberattacks become more sophisticated, collaboration among fintech companies, financial institutions, and cybersecurity firms is crucial. Sharing threat intelligence and best practices can help these companies identify and mitigate emerging threats effectively.

  1. Educate your customers

Businesses realize that empowering customers to understand cybersecurity best practices and recognize phishing attempts can significantly reduce the risk of cyberattacks. As a result, more and more financial service providers integrate strategies to provide clear and concise cybersecurity guidance to their customers.

The future of fintech and banking: Balancing growth and compliance

Looking ahead, regulators around the world will continue to focus on enforcing requirements to improve resilience across the financial sector and protect customer data.

Going forward, fintech, finance and banking firms will need to adopt a proactive, holistic approach to security, including sharing insights with others, educating customers, and leveraging available tools and services to strengthen their security posture. By doing so, they can remain compliant and continue to deliver seamless, user-friendly, and secure financial services.

We hope you liked this article! If you’d like to discuss how we can help, get in touch with us!

Written by Balazs Pozner
CEO and Founder of HACKRATE Ltd.

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